Blue Shield to Offer Members of Some Plans $100 Rebates

In a move to combat rising medical costs, Blue Shield of California said Thursday that about 180,000 enrollees in some Blue Shield health plans will receive $100 in cash each time they select a hospital that has agreed to certain cost-containment measures.

The state has 182 of these hospitals, with 46 of them in Los Angeles County, according to Blue Shield, the state's third-largest health insurer.

Members of Blue Shield's Coronet Major Benefits, Continuing Membership, Coronet 365 and Coronet 500 plans are eligible for the rebates.

These are "individual and family" plans, for which an individual pays the entire cost.

The program is not available to individuals enrolled in a Blue Shield Medicare supplemental plan or the Blue Shield Preferred Plan. Those subscribers already receive a 15% to 18% discount for using preferred hospitals.

"The cost of care has been rising and rising," said Charles L. Parcell, Blue Shield senior vice president. "These hospitals have agreed to very severe cost controls. . . . They are charging us less for the service they are providing, so we are charging our members less to encourage them to use our cost-effective hospital."

The federal government and private industry have recently tried to crack down on costs in the $400-billion-a-year health-care industry.

In 1983, the government passed new Medicare regulations that limit the amount that the government will pay for hospital care. Corporations have also placed hospitals on a budget and encouraged their employees to use hospitals that have agreed to control costs.

The average daily bill for patient care in a California hospital has more than quadrupled in the last decade, to $662.35 in 1983 from $161.56 in 1973, according to the most recent figures from the California Hospital Assn. in Sacramento. Total hospital expenses, which more accurately reflect the effect of hospital costs on the consumer, rose to $4,276 in 1983 from $1,072 in 1973, the association says.

However, Roy Gonella, an executive with the Los Angeles office of William Mercer, a New York-based employee-benefits consulting firm, said health insurers have not generally provided cash incentives to consumers, choosing instead to steer patients to preferred hospitals by paying a larger share of their medical bills.

"Some (insurers) have used rebates for maternity care or other kinds of specific things," Gonella said, "but most have felt it better to design in incentives to their health plans so that (an insurer) pays 90% of costs, for example, at one of their hospitals and only 80%" at a hospital not covered under their health plan.

Blue Shield, which claims to be the first insurer in the nation to offer cash incentives, says it will continue its rebate program until Dec. 31. A subscriber can expect a check about 30 days after a claim is processed, the company said. One check will be mailed per patient per admission.

Parcell said he does not expect the incentive to lead to more hospital admissions but rather to direct the existing patient load to preferred hospitals where Blue Shield receives more favorable rates.

"Nobody in his right mind is going to go to the hospital just to get a $100 get-well card from Blue Shield," Parcell said, adding that "we do believe the incentive is large enough to encourage people to choose a preferred hospital when they have a choice," he added.